Correlation Between Miller Opportunity and Morgan Stanley

Can any of the company-specific risk be diversified away by investing in both Miller Opportunity and Morgan Stanley at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Miller Opportunity and Morgan Stanley into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Miller Opportunity Trust and Morgan Stanley Institutional, you can compare the effects of market volatilities on Miller Opportunity and Morgan Stanley and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Miller Opportunity with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Miller Opportunity and Morgan Stanley.

Diversification Opportunities for Miller Opportunity and Morgan Stanley

-0.52

Correlation Coefficient

Miller Opportunity  Morgan Stanley

Excellent diversification

The 3 months correlation between Miller and Morgan is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Miller Opportunity Trust and Morgan Stanley Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Insti and Miller Opportunity is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Miller Opportunity Trust are associated (or correlated) with Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley Insti has no effect on the direction of Miller Opportunity i.e., Miller Opportunity and Morgan Stanley go up and down completely randomly.

Pair Corralation between Miller Opportunity and Morgan Stanley

Assuming the 90 days horizon Miller Opportunity Trust is expected to generate 1.47 times more return on investment than Morgan Stanley. However, Miller Opportunity is 1.47 times more volatile than Morgan Stanley Institutional. It trades about 0.09 of its potential returns per unit of risk. Morgan Stanley Institutional is currently generating about 0.04 per unit of risk. If you would invest  2,243  in Miller Opportunity Trust on September 20, 2024 and sell it today you would earn a total of  1,750  from holding Miller Opportunity Trust or generate 78.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Miller Opportunity Trust  vs.  Morgan Stanley Institutional

Miller Opportunity Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Miller Opportunity Trust are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Miller Opportunity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Morgan Stanley Insti

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morgan Stanley Institutional has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Morgan Stanley is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Miller Opportunity and Morgan Stanley

The main advantage of trading using opposite Miller Opportunity and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Miller Opportunity position performs unexpectedly, Morgan Stanley can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Morgan Stanley will offset losses from the drop in Morgan Stanley's long position.

The idea behind Miller Opportunity Trust and Morgan Stanley Institutional pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.